Fundamental Comment

Economic Week: China's growth data, trade war developments

China's growth data, trade war developments in focus

Observers of global markets will be on track with a number of important economic data this week, led by growth data from the Chinese economy, as well as inflation and retail sales data from major economies.

The Chinese government will release third-quarter GDP, which may witness a decline in the pace of growth to 6.1 percent year-on-year, compared to 6.2 percent expansion in the second quarter.

If China's growth eases, it could raise fears of a trade crisis with the United States and put pressure on the Chinese government to reach an agreement to prevent further negative impact on its economy.

The Chinese government will also release data on industrial production and retail sales, which are usually of great importance as markets will continue to follow intensively the latest developments in the undergoing U.S.-China trade showdown.   

Dollar to get cues from US retail sales

The US dollar will probably be affected by retail sales data and industry reports, in addition to statements by Federal Reserve members.

The US will release a number of economic reports that include the manufacturing sector, unemployment benefits and consumer confidence, but retail sales may be of great interest as it largely reflects household spending on goods and services.

Retail sales are forecast to rise 0.3 percent in September after recording a 0.4 percent rise in August.

It should be noted that any developments or statements related to the trade dilemma with China could affect the movements of the green currency more than economic data.

Last but not least, any comments from members of the FOMC this week could also weigh heavily on the greenback.

Pound will attempt to resume rebound  

The pound managed to rebound from a five-week low against the dollar last week, as hopes rose that Britain and the European Union could reach an agreement before the end of October.

This week, the pound may depend on the latest political situation in Britain as it remains the main driver amid the uncertainty surrounding the Brexit.

As for the economic data, unemployment reports, inflation and retail sales from the UK are the most important this week.

Analysts are expecting the unemployment rate may have stabilize at 3.8 percent in the quarter to August, while wage growth may have fallen to 3.7 percent year-on-year from a previous of 3.8 percent.

The consumer price index, the inflation gauge preferred by the Bank of England, may indicate a rise to 1.9 percent in the year ended September from 1.7 percent in August.

Retail sales rose 0.2 percent in September, following a similar increase in August, according to median estimates.

Euro may follow the general sentiment

The euro may follow the general sentiment in the markets, but may be affected by the economic data released this week.

Investors will probably pay some attention data coming out of the eurozone, including industrial production, investor confidence and trade balance for August.

The most notable report is the final CPI reading in the euro zone, which is expected to remain unrevised at 0.9 percent in the year through September.    

Gold looks for support, oil may resume recovery

Gold prices retreated last week, as the ease in trade tensions between the US and China lowered the haven demand on the precious metal, pushing it below the psychological level of $1,500 an ounce.

This week, gold prices may get clues from U.S. data and the latest developments in US-China trade standoff.

Key support levels are located at $1470 then $1450, while $1493 is the pivot point for gold this week.

As for oil, prices jumped more than 2 percent on Friday after Iranian media reported that a state-owned oil tanker was hit by missiles in the Red Sea near Saudi Arabia, increasing the likelihood of supply disruptions after weeks of attacks on Saudi Aramco.

Oil price movements this week will depend on optimism or pessimism in the markets after the release of economic data, as well as the US government's weekly report on crude inventories.

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